The number of corporate insolvencies in Scotland has fallen in the latest financial year, but total personal cases experienced double-digit growth.
Data from Accountant in Bankruptcy, an executive agency of the Scottish Government, revealed a 7 per cent year-on-year drop in corporate insolvencies in 2016-17 to reach 840.
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Tim Cooper, chairman of insolvency and restructuring trade body R3 in Scotland, said: “Despite tougher economic conditions for Scottish businesses over the last 12 months, it’s encouraging to see firms are proving resilient.”
He also cited recent R3 research finding that Scottish firms were the most stable in the UK, with a fifth at greater-than-average risk of insolvency, compared with a UK average of a quarter.
Cooper added: “The process of restructuring undertaken by many of Scotland’s oil and gas businesses over 2016 may be bearing fruit, helping related companies – especially in the North-east – to stay afloat.”
And he said buoyant consumer confidence in 2016 will have had a positive effect on companies’ results, but the outlook was less clear.
“Whether this confidence will continue is trickier to predict, but with inflation rising, the willingness of the Scottish public to carry on spending may shrink in 2017. Rising inflation and lower growth may see some question marks emerge about the health of the Scottish economy this year, so it makes sense for any company facing cashflow issues to seek qualified, professional advice ahead of the curve.”
Accountant in Bankruptcy also reported that personal insolvencies in Scotland showed a year-on-year jump of 18 per cent in 2016-17 to reach 9,958.
Cooper said the numbers “have started to creep up again” and he identified contributory factors, saying: “Inflation is rising, while real pay has not kept pace with increases in the price of essentials like food and fuel.
“For many people whose finances were already precarious, this may have been enough to put them in a position where they have to consider entering a formal insolvency procedure.”
He also said Scotland “is particularly sensitive to inflation as a relatively high proportion of Scots have fixed incomes, which makes coping with price rises difficult”. But he stressed that insolvency numbers “are far lower now than they were in the aftermath of the recession”.